Frontier’s New Pricing Structure Looks a Lot Like Spirit’s, But There Are Differences

May 5, 2014

More Reading on This Topic: Frontier

We’ve been talking about Frontier’s transformation into an ultra low cost carrier (ULCC) for a long time here, but now that the airline is under new management, the transition has been speeding up. Last week, Frontier made a big change to its pricing structure. It looks pretty similar to what Spirit has done, and that’s no surprise since Frontier’s new owners happen to be Spirit’s old owners. But there are some differences between the two.

Frontier ULCC Transformation

Frontier used to have four fare tiers. Basic and Economy were the same except Economy was sold directly through Frontier and Basic was sold through travel agents. Fares were just about identical but the Basic fares were stripped of some benefits, including the right to a free carry-on bag. The next one up was Classic, which had some extra benefits included. Then Classic Plus was at the top with fully refundable fares, more legroom seats, etc. Now, only the Economy and Classic Plus fares remain.

Taking a page out of Spirit’s book, Frontier lowered its Economy fares on average by 12 percent (at least, that’s what the press release says), and then unbundled everything. Carry-on bags that don’t fit under the seat in front of you will cost $25. Basic seat assignments start at $3 and go up depending upon distance or type of seat.

Then, echoing Spirit, Frontier has created the Discount Den. You’ll pay a certain amount (not sure how much since charges don’t start until June 2015) and you’ll get discounts on things like carry-on and checked bags. If this sounds like Spirit’s $9 Fare Club, it’s because it’s very similar.

You might be wondering what this move has to do with being an ultra low COST carrier. After all, this is a revenue change, not a cost change, right? Not exactly. Some of these fees will help to lower costs. When you start charging for soda, for example, people won’t drink nearly as much as when it’s free. So the airline can stock fewer drinks and save money. By charging for all bags, they encourage people to pack lighter. Fewer bags mean less weight on the airplane and lower fuel burn.

But back to the details. How is this different than what Spirit does?

There Will Still Be a Traditional Bundled Fare
Unlike at Spirit, you will still have the option of buying a bundled fare on Frontier. The Classic Plus fare looks to be running about $75 to $100 more than the Economy Fare in each direction. That includes one checked bag and one carry-on bag (makes up $50 right there). It also includes seating in Stretch, the extra legroom section. One alcoholic drink is free and all non-alcoholic ones are included. Fares are fully refundable and changeable without a fee. Oh, and you get priority check in, security, and boarding.

You Can Pay for Extra Legroom
Sure, Spirit has its Big Front Seat which is a First Class-style seat in the front row of the aircraft. But Frontier has a more traditional extra legroom section in coach, similar to Economy Plus on United. It starts at $15 above the base fare. (It’s included in the Classic Plus fare.)

There is An Elite Frequent Flier Program
The Frontier EarlyReturns program still has an elite frequent flier program, and the benefits are even greater than before because it includes things like two free checked bags, a free carry-on, and priority check-in/security/boarding. (It always included those things, but now nobody else gets a free bag on an Economy fare.)

In short, the basics are effectively the same. Frontier, like Spirit, wants to lower fares and charge extra for everything. It’s a model that works. But Frontier seems to at least have softened the edges a little bit with things like extra legroom seats and an option for a bundled fare.

Long time Frontier fans probably won’t like this change, but it’s the right move for the airline. If it had kept going the way it was previously, it would be out of business by now.

Brett

12 responses to “Frontier’s New Pricing Structure Looks a Lot Like Spirit’s, But There Are Differences”

Eric

May 5, 2014 at 7:33 am

To paraphrase Bush 41…this is a ‘kinder, gentler’ version of Spirit’s model. Yes, Frontier’s hard core fans are a bit PO’d about the changes;.but it looks like they want to keep the critters a viable option for biz travelers on a budget (which NK is NOT) . I agree that the old model was a dead-end road to ruin. Will be interesting to see if this hybrid ‘budget leisure and business traveler’ strategy delivers returns.

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David SF eastbay

May 5, 2014 at 7:47 am

If Frontier starts to model itself after Spirit, wont’ Spirit still be the Walmart to Frontiers Target? Spirit will still be the one everyone talks about as being the worst (like Walmart), but Frontier will stay under the radar (like Target) because no one protests about number two, only number one. So while Frontier and Spirit may do the exact same thing, negative media attention would always be directed at Spirit (Walmart) since they would still be the very bottom of everything.

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Tom

May 5, 2014 at 9:30 am

Another difference? Spirit has lower base fares …. if Frontier does, they’re a lot harder to find. They seem to pretty be matching the legacies here but with all the new fees.

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Maureen Coffey

May 5, 2014 at 10:07 am

A lot of the lower pricing of these “ultra low” airlines is explained by two factors: a) that you are dropped off at airports from where to get to your final destination the taxi or train fares eat up nearly all you saved on the fare price. And b) the bottom line of these airlines is often propped up by the subsidies local authorities shell out in subsidies for otherwise underfrequented smaller airports that have been built to satisfy some rural vanities. In the end the taxpayers (including the majority who don’t fly with these carriers) pay for that funny game of musical chairs. Once the subsidies stop, most of these carriers will get into the red.

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1. Sean S.
  
  May 5, 2014 at 7:29 pm
  
  Outside of Wilmington and Trenton, there’s no real indication that Frontier is pursuing a Ryanair strategy. In fact you really can’t pursue such a strategy in the US due to the lack of density and usable, alternate airports for most major cities. And even in Wilmington/Trenton, I get the feeling they’re targeting people looking for a cheap ticket back home, not necessarily leasiure fliers or business fliers to the DC/NYC area.
  
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JayB

May 5, 2014 at 11:12 am

Love these airline press releases, each announcing more fare options, lowered fares, and simplified fare structures. Of course, mention something about giving the traveler more flexibility.Unbundling always sounds nice, too. But, it’s really nothing more than how can we get you so confused you’ll pay much, much more than you ever have before, and you’ll probably have no clue it’s occurring.

For me, options, flexibility, unbundling sound so nice. But, it still comes down to how much am I going to have to pay to go from point A to point B, in or under the basic condition of air travel.

I get a reservation for a seat on a particular flight. I get to be transported in an aircraft with a seat. An aircraft having adequate air so I won’t sufficatate, a restroom facility to receive my bodily fluids, assuming the trip is of such a planned duration I can reasonably be expected to require such service, space to stow anything I might need during or between flights, a piece of luggage for storage in the cargo hold, with such luggage of primary importance that on my return flight I won’t smell like a pig or otherwise require the airline to fumigate the plane to make it usable for subsequent travelers.

Everything else is a side event I may need to consider if I want to, but not have it included or be dependent on the price I pay for basic airline service. Refundability, change fees, travel insurance, rental car, brokerage services, cable TV, life insurance, tanning services. You want them, here’s our price list. Note: it has nothing to do with oour low, low prices! Our prices don’t include asterisks signifying additional fees and charges may apply. And, we no longer use the word “fare.” It’s “price”–that’s a number with a dollar sign in front of it.

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1. ChuckMO
  
  May 5, 2014 at 4:58 pm
  
  Living in St Louis I have not been exposed to actually trying to book NK, but F9 is now an option for some travel. I haven’t tried looking at F9 much as my next trip was booked before the ULCC changeover, and didn’t involve a Frontier market anyway. My travel needs usually involve a 2-3 night stay, with no need for more than a legal sized carry-on that will fit nicely in an overhead bin, pus one shoulder bag which fits under the seat.
  
  My travels are always for leisure, and I will consider F9 for my next westward trip if they serve my intended destination. IF however, the comparison shopping becomes too complex I’ll most likely book a bundled fare I’m comfortable with.
  
  This will certainly influence the choice I make in the future though I enjoyed flying F9 in the past. It’s a wait and see proposition for me.
  
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Jay F.

May 5, 2014 at 1:54 pm

Since it is being argued that charging separately for each individual cost item is the best business strategy, every business in America should follow suit. Wal-Mart could implement a system where at check-out one gets charged surcharges that vary per cost of operating at the specific location being shopped at. The farther from the distribution center, account for varying state regulations, volatility in fuel prices, depreciation schedules, taxes and so forth: higher fees. See the reaction of the general public to that strategy.

The competition in other countries is looking to balance cost with the passenger experience. American carriers may be falling into the predicament of a penny wise, a pound foolish. There is such a thing as the law of diminishing returns. US carriers may be perfecting the art of gaming prices today, but loosing market share in growing international markets that do not tolerate a generic and mediocre travel experience.

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1. astra
  
  May 6, 2014 at 9:37 am
  
  I believe Wal-Mart already does, to some degree. I guarantee you the process of goods at a Wal-Mart location on Long Island or Hawaii will be considerably higher than the identical goods in Nebraska.
  
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Chase

May 6, 2014 at 10:29 am

Another HUGE difference between NK and F9 is that F9 hasn’t (yet) reduced seat pitch to the unbearable 29″ level NK has. I’m only 5’9 and I can’t sit in NK’s ‘pre-reclined’ seats longer than an hour, it’s incredibly uncomfortable on my knees. And I’ll say the only reason I did fly NK again after the first miserable experience was to rid myself of their frequent flier miles (booked 6-months out, of course, to avoid their absurd redemption fees)!

Also, as a current F9 Summit, I appreciate they didn’t reduce anything in the latest round of cuts for us. We’ve already lost free TV and food, so I just plan on maintaining Ascent status from this point forward. It should come in handy being DEN-based.

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Ian L

May 25, 2014 at 3:51 pm

With the new ULCC model, it’s a lot harder for other airlines to revenue-manage to compete directly with F9. Six months ago, an AUS-DEN flight on Southwest would be about the same price as one on F9, so people would just pick Southwest. Now, F9 is a little over $20 cheaper each way, which pays for either a checked bag or a carry-on and a drink on-board. And if you’re going somewhere for a day trip, you can just take the cheaper option. Now, I’ve seen cheaper flights than the one that F9 is advertising ($39 fares from WN a few years ago). But right now they’re actually beating WN and UA by a sizable margin on AUS-DEN.

Am I going to whine about having to check a bag to get the cheapest flight (I’m usually gone for a few days at a time so personal item only doesn’t work)? Yep. But unbundling actually allows F9 to have a much better onboard product than Southwest, so all else equal (I still have some WN miles to burn) I’ll fly the airline with animals on the tail.

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1. Ian L
  
  May 25, 2014 at 3:56 pm
  
  Plus there re a few hidden bonuses like the occasional cheap flight a day or two out. That AUS-DEN route I just talked about? I could fly up tomorrow and fly back on Tuesday for under $200, bags included. Now, all of the rest of the flights on those days were priced comparably with WN (minus a bit for the carry-on/checked bag). But with less than 24 hours’ notice, those flights are a steal.
  
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